EX-99.1 2 tm2116836d1_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

ZIM Reports Financial Results for the First Quarter of 2021

 

Generates Record Quarterly Net Income of $590 Million and
Adjusted EBITDA of $821 Million

 

Increases 2021 Guidance to Between $2.5 Billion and $2.8 Billion of Adjusted EBITDA and Between $1.85 Billion to $2.15 Billion of Adjusted EBIT

 

Announces Special Dividend of Approximately $238 Million, or $2.00 Per Share, on Top of 2021 Annual Dividend

 

Haifa, Israel, May 19, 2021 – ZIM Integrated Shipping Services Ltd. (NYSE: ZIM), a global container liner shipping company, announced today its consolidated results for the three months ended March 31, 2021.

 

First Quarter 2021 Highlights

 

·Net income for the first quarter was $589.6 million (compared to a loss of $11.9 million in the first quarter of 2020), or $5.35 per share1
·Adjusted EBITDA2 for the first quarter was $820.5 million, a year-over-year increase of 744%
·Operating income (EBIT) for the first quarter was $683.5 million, a year-over-year increase of 2,645%
·Adjusted EBIT for the first quarter was $687.8 million, a year-over-year increase of 2,430%

 

 

1 Earnings per share calculation for all periods reflect a share split of 1:10 that became effective in 2021.

2 See disclosure regarding “Use of Non-IFRS Financial Measures” below.

 

 

 

 

 

·Revenues for the first quarter were $1.74 billion, a year-over-year increase of 112%
·ZIM carried 818 thousand TEUs in the first quarter of 2021, a year-over-year increase of 28%
·The average freight rate per TEU in the first quarter of 2021 was $1,925, a year-over-year increase of 76%
·Net leverage ratio3 of 0.5x at March 31, 2021, compared to 1.2x at December 31, 2020
·Completed IPO, raising $204 million in net proceeds
·Announced strategic long-term chartering agreement with Seaspan for ten "green" LNG-fueled vessels demonstrating ZIM's commitment to reducing its carbon footprint and leading environmentally friendly practices in the shipping industry
·Subsequent to quarter end, announced full early redemption of $349 million principal amount of Series 1 and 2 Notes due 2023 payable in June 2021
·Declared a special cash dividend of approximately $238 million, or $2.00 per ordinary share, to be paid on September 15, 2021, to holders of the ordinary shares as of August 25, 2021; reiterated plan to distribute annual dividend of 30-50% of 2021 net income in 2022

 

Eli Glickman, ZIM President & CEO, stated, “This is truly a momentous time in ZIM’s 75-year history. Following our successful IPO to become the first global container liner to list in the U.S., we are proud of our demonstrated accomplishments based on seamless execution aligned with our stated objectives. Driven by ZIM’s differentiated approach and proactive strategies, we generated our highest ever quarterly net profit, EBITDA, and cash flow, while continuing to deliver industry leading margins. We also significantly strengthened our balance sheet, with shareholder equity now in excess of $1 billion. In a short time since going public, we have also achieved important milestones for shareholders. Specifically, we significantly strengthened our position in the growing and strategic Pacific and Intra Asia trades, with our long-term chartering agreement for large LNG dual-fuel container vessels and the launch of new services to address unmet need in profitable routes to generate superior growth. We also drew on our strong cash flow to redeem ZIM’s $349 million outstanding Series 1 and 2 Notes sooner than expected and earlier than the stated maturity by two years.”

 

 

3 Net leverage ratio is defined as face value of short- and long-term debt less cash, cash equivalents and short-term deposits divided by Adjusted EBITDA of the last twelve-month period.

 

 

 

 

 

Mr. Glickman added, “Based on our success further strengthening our balance sheet, we are pleased to allocate capital to invest in new equipment to continue to best serve customers while returning capital to shareholders. With today’s declaration of a special dividend, we will be distributing approximately $238 million, or $2.00 per share, in line with our commitment to unlock significant value. Importantly, this dividend is over and above our 2021 annual dividend guidance, supplementing the 30-50% of 2021 net income we expect to distribute in 2022.”

 

Mr. Glickman concluded, “As a result of our outstanding execution and the full completion of freight contracts at higher rates, we have substantially raised our full year outlook, with 2021 Adjusted EBITDA now expected to be between $2.5 billion and $2.8 billion, more than 75% higher than the midpoint of our previous guidance range. Going forward, we remain poised to continue leveraging our agility to maximize profitability and advance ZIM’s position as an innovative digital leader of seaborne transportation and logistics services with attractive growth engines.”

 

Summary of Key Financial and Operational Results (Q1’21 vs. Q1’20 unless otherwise noted)

   Q1’21   Q1’20 
Carried volume (K-TEUs)    818    638 
Average freight rate ($/TEU)    1,925    1,091 
Revenue ($ in millions)    1,744    823 
Operating income (EBIT) ($ in millions)    683    25 
Profit (loss) before income taxes ($ in millions)    644    (9)
Net income (loss) ($ in millions)    590    (12)
Adjusted EBITDA ($ in millions)    821    97 
Adjusted EBIT ($ in millions)    688    27 
Adjusted EBITDA margin (%)    47    12 
Adjusted EBIT margin (%)    39    3 
Net cash generated from operating activities ($ in millions)    777    102 
Earnings (loss) per share (fully diluted) ($)    5.13    (0.14)
Free cash flow ($ in millions)    643    98 
Net debt ($ in millions) (Q1’21 vs. Q4’20)    915    1,236 

 

 

 

 

 

Financial and Operating Results for the First Quarter Ended March 31, 2021

 

Total revenues were $1.74 billion for the first quarter of 2021, compared to $823.2 million for the first quarter of 2020, primarily driven by an increase in revenues from containerized cargo, reflecting increases in both freight rates and carried volume.

 

Operating income (EBIT) for the first quarter of 2021 was $683.5 million, compared to $24.9 million for the first quarter of 2020.

 

Net income for the first quarter of 2021 was $589.6 million, compared to a net loss of $11.9 million for the first quarter of 2020.

 

Adjusted EBITDA was $820.5 million for the first quarter of 2021, compared to $97.2 million for the first quarter of 2020. Adjusted EBIT was $687.8 million for the first quarter of 2021, compared to $27.2 million for the first quarter of 2020. Adjusted EBITDA and Adjusted EBIT margins for the first quarter of 2021 were 47% and 39%, respectively. This compares to 12% and 3% for the first quarter of 2020, respectively.

 

Net cash generated from operating activities was $777.4 million for the first quarter of 2021, compared to $101.6 million for the first quarter of 2020.

 

ZIM carried 818 thousand TEUs for the first quarter of 2021, compared to 638 thousand TEUs in the first quarter of 2020. The average freight rate per TEU was $1,925 for the first quarter of 2021, compared to $1,091 for the first quarter of 2020.

 

 

 

 

 

Liquidity and Cash Flows

 

ZIM’s cash and cash equivalents increased by $618 million from $570 million at December 31, 2020 to $1.19 billion at March 31, 2021. Capital expenditures totaled $133.0 million for the first quarter of 2021, compared to $3.6 million for the first quarter of 2020. Net debt decreased by $321 million from $1.24 billion as of December 31, 2020 to $915 million as of March 31, 2021. ZIM’s net leverage ratio as of March 31, 2021 was 0.5x, compared to 1.2x as of December 31, 2020.

 

Early Redemption of Notes

 

In April 2021, the Company announced the early redemption of 100% of its Series 1 and 100% of its Series 2 unsecured notes due 2023 at an aggregate principal amount of $349 million, payable on June 21, 2021, in accordance with the terms of the indenture governing the notes.

 

Long-Term Chartering Agreement

 

In February 2021, the Company announced a strategic agreement for the long-term charter of ten 15,000 TEU liquefied natural gas (LNG) dual-fuel container vessels to serve ZIM's Asia - US East Coast trade.

 

Special Dividend

 

On May 19, 2021, the Company’s Board of Directors declared a special cash dividend of approximately $238 million, or $2.00 per ordinary share. The special cash dividend will be paid on September 15, 2021, to all holders of record of ordinary shares as of August 25, 2021. The special dividend is supplemental to ZIM’s previously communicated 2021 annual dividend guidance, whereby the Company expects to distribute 30-50% of 2021 net income in 2022, subject to Board approval.

 

Updated Full-Year 2021 Guidance

 

The Company increased its full-year guidance and expects to generate in 2021 Adjusted EBITDA of between $2.5 billion and $2.8 billion and Adjusted EBIT of between $1.85 billion to $2.15 billion.

 

 

 

 

 

Use of Non-IFRS Measures in the Company’s 2021 Guidance

 

A reconciliation of the Company’s non-IFRS financial measures included in its full-year 2021 guidance to corresponding IFRS measures is not available on a forward-looking basis. In particular, the Company has not reconciled its Adjusted EBITDA and Adjusted EBIT because the various reconciling items between such non-IFRS financial measures and such corresponding IFRS measures cannot be determined without unreasonable effort due to the uncertainty regarding, and the potential variability of, the future costs and expenses for which the Company adjusts, the effect of which may be significant, and all of which are difficult to predict and are subject to frequent change.

 

Conference Call Details

 

Management will host a conference call and webcast (along with a slide presentation) to review the results and provide a corporate update today at 8:00 AM ET.

 

To access the live conference call by telephone, please dial the following numbers: United States +1-855-265-6958 or +1-718-705-8796; Israel +972-3-721-9662; or UK/international +44-121-281-8004. The call (and slide presentation) will be available via live webcast through ZIM’s website, located at the following link. Following the conclusion of the call, a replay of the conference call will be available on the Company's website.

 

About ZIM

 

ZIM Integrated Shipping Services Ltd. (NYSE: ZIM) is a global, asset-light container liner shipping company with leadership positions in the markets where it operates. Founded in Israel in 1945, ZIM is one of the oldest shipping liners, with over 75 years of experience, providing customers with innovative seaborne transportation and logistics services with a reputation for industry leading transit times, schedule reliability and service excellence. For additional information, please visit www.zim.com.

 

 

 

 

 

Forward-Looking Statements

 

This press release contains, or may be deemed to contain forward-looking statements (as defined in the U.S. Private Securities Litigation Reform Act of 1995 and the Israeli Securities Law, 1968). In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about the Company, may include projections of the Company’s future financial results, its anticipated growth strategies and anticipated trends in its business. These statements are only predictions based on the Company’s current expectations and projections about future events or results. There are important factors that could cause the Company’s actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause such differences include, but are not limited to: market changes in freight, bunker, charter and other rates or prices, new legislation or regulation affecting the Company’s operations, new competition and changes in the competitive environment, the outcome of legal proceedings to which the Company is a party, and other risks and uncertainties detailed from time to time in the Company’s filings with the U.S. Securities and Exchange Commission, including under the caption “Risk Factors” in its 2020 Annual Report. 

 

Although the Company believes the expectations reflected in the forward-looking statements contained herein are reasonable, it cannot guarantee future results, level of activity, performance or achievements. Moreover, neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. The Company assumes no duty to update any of these forward-looking statements after the date hereof to conform its prior statements to actual results or revised expectations, except as otherwise required by law.

 

The Company prepares its financial statements in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

 

Use of Non-IFRS Financial Measures

 

The Company presents non-IFRS measures as additional performance measures as the Company believes that it enables the comparison of operating performance between periods on a consistent basis. These measures should not be considered in isolation, or as a substitute for operating income, any other performance measures, or cash flow data, which were prepared in accordance with Generally Accepted Accounting Principles as measures of profitability or liquidity. Please note that Adjusted EBITDA does not take into account debt service requirements, or other commitments, including capital expenditures, and therefore, does not necessarily indicate the amounts that may be available for the Company’s use. In addition, Non-IFRS financial measures, as those presented by the Company, may not be comparable to similarly titled measures reported by other companies, due to differences in the way these measures are calculated.

 

Adjusted EBITDA is a non-IFRS financial measure which we define as net income (loss) adjusted to exclude financial expenses (income), net, income taxes, depreciation and amortization in order to reach EBITDA, and further adjusted to exclude impairment of assets, non-cash charter hire expenses, capital gains (losses) beyond the ordinary course of business and expenses related to legal contingencies.

 

 

 

 

 

Adjusted EBIT is a non-IFRS financial measure which we define as net income (loss) adjusted to exclude financial expenses (income), net and income taxes, in order to reach our results from operating activities, or EBIT, and further adjusted to exclude non-cash charter hire expenses, impairment of assets, capital gains (losses) beyond the ordinary course of business and expenses related to legal contingencies.

 

Free cash flow is a non-IFRS measure which we define as net cash generated from operating activities plus the net cash generated (used) from investment activities.

 

See the reconciliation of net income to Adjusted EBITDA and Adjusted EBIT and net cash generated from operating activities to free cash flow under "Reconciliation of Non-IFRS Measures" below.

 

Investor Relations:

Elana Holzman
ZIM Integrated Shipping Services Ltd.
+972-4-865-2300
holzman.elana@zim.com

 

Leon Berman
The IGB Group
212-477-8438
lberman@igbir.com

 

Media:

Avner Shats
ZIM Integrated Shipping Services Ltd.
+972-4-865-2520
shats.avner@zim.com

 

 

 

 

 

CONSOLIDATED BALANCE SHEET

(U.S. dollars in thousands)

 

   Three Months ended
March 31,		   Year ended
December 31,		 
   2021   2020   2020 
Assets               
Vessels   1,299,718    737,047    948,004 
Containers and handling equipment   665,636    437,639    520,887 
Other tangible assets   64,466    67,877    67,133 
Intangible assets   66,808    65,716    66,465 
Investments in associates   13,544    9,171    8,441 
Other investments   3,147    2,717    4,888 
Trade and other receivables   5,647    5,390    5,293 
Deferred tax assets   1,619    1,018    1,502 
Total non-current assets   2,120,585    1,326,575    1,622,613 
                
Assets classified as held for sale        10,564      
Inventories   86,256    56,699    52,237 
Trade and other receivables   700,385    306,557    520,001 
Other investments   63,015    59,510    58,976 
Cash and cash equivalents   1,188,408    196,741    570,414 
Total current assets   2,038,064    630,071    1,201,628 
Total assets   4,158,649    1,956,646    2,824,241 
                
Equity               
Share capital and reserves   1,992,378    1,783,479    1,790,794 
Accumulated deficit   (936,101)   (2,053,010)   (1,523,528)
Equity attributable to owners of the Company   1,056,277    (269,531)   267,266 
Non-controlling interests   3,841    4,327    7,189 
Total equity   1,060,118    (265,204)   274,455 
                
Liabilities               
Lease liabilities   1,055,126    659,649    811,840 
Loans and other liabilities   440,196    550,265    519,471 
Employee benefits   63,198    58,252    66,626 
Deferred tax liabilities   34,159    347    339 
Total non-current liabilities   1,592,679    1,268,513    1,398,276 
                
Trade and other payables   538,717    431,223    398,876 
Provisions   25,631    16,081    21,420 
Contract liabilities   295,653    125,109    230,469 
Lease liabilities   508,154    236,835    362,176 
Loans and other liabilities   137,697    144,089    138,569 
Total current liabilities   1,505,852    953,337    1,151,510 
Total liabilities   3,098,531    2,221,850    2,549,786 
                
Total equity and liabilities   4,158,649    1,956,646    2,824,241 

 

 

 

 

 

CONSOLIDATED INCOME STATEMENTS

(U.S. dollars in thousands, except per share data)

 

   Three months ended
March 31,		   Year ended
December 31,		 
   2021   2020   2020 
Income from voyages and related services   1,744,335    823,215    3,991,696 
                
Cost of voyages and related services               
                
Operating expenses and cost of services   (880,627)   (698,388)   (2,835,112)
Depreciation   (128,129)   (67,063)   (291,559)
                
Gross profit   735,579    57,764    865,025 
                
Other operating income   2,313    2,016    12,621 
Other operating expenses   (84)   (4)   4,272 
General and administrative expenses   (55,898)   (35,377)   (163,210)
Share of profits of associates   1,545    497    3,341 
                
Results from operating activities   683,455    24,896    722,049 
                
Net finance expenses   (39,445)   (33,727)   (181,260)
                
Profit (loss) before income taxes   644,010    (8,831)   540,789 
                
Income taxes   (54,422)   (3,086)   (16,599)
                
Profit (loss) for the period   589,588    (11,917)   524,190 
                
Attributable to:               
                
Owners of the Company   587,599    (13,549)   517,961 
Non-controlling interests   1,989    1,632    6,229 
                
Profit (loss) for the period   589,588    (11,917)   524,190 
                
Earnings (loss) per share (US$)*               
Basic earnings (losses) per 1 ordinary share   5.35    (0.14)   5.18 
Diluted earnings (losses) per 1 ordinary share   5.13    (0.14)   4.96 
                
Weighted average number of shares for EPS calculation*:               
Basic   109,777,778    100,000,000    100,000,000 
Diluted   114,508,115    100,000,000    104,530,892 

 

(*)       Reflect a share split of 1:10 that became effective in 2021, in all presented periods.

 

 

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

 

   Three months ended
March 31,		   Year ended
December 31,		 
   2021   2020   2020 
Cash flows from operating activities               
Profit (loss) for the year   589,588    (11,917)   524,190 
                
Adjustments for:               
Depreciation and amortization   133,585    72,133    314,185 
Impairment recovery in respect of tangible assets             (4,329)
Net finance expenses   39,445    33,727    181,260 
Share of profits and change in fair value of investees   (2,432)   (497)   (4,143)
Capital gains   (431)   (1,310)   (8,814)
Income taxes   54,422    3,086    16,599 
    814,177    95,222    1,018,948 
                
Change in inventories   (34,019)   3,643    8,105 
Change in trade receivables and other receivables   (174,298)   2,243    (204,469)
Change in trade and other payables including contract liabilities   175,698    9,203    68,670 
Change in provisions and employee benefits   (728)   (7,132)   (2,152)
    (33,347)   7,957    (129,846)
                
Dividends received from associates   711    15    4,360 
Interest received   769    876    2,317 
Income taxes paid   (4,909)   (2,495)   (14,983)
                
Net cash generated from operating activities   777,401    101,575    880,796 
                
Cash flows from investing activities               
Proceeds from sale of tangible assets, intangible assets, investments and affiliates   504    1,349    6,717 
Acquisition of tangible assets, intangible assets and
investments		   (132,998)   (3,561)   (42,641)
Change in other investments and other receivables   (2,061)   (1,241)   763 
Net cash used in investing activities   (134,555)   (3,453)   (35,161)

 

 

 

 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(U.S. dollars in thousands)

 

   Three months ended
March 31,		   Year ended
December 31,		 
   2021   2020   2020 
Cash flows from financing activities               
Issuance of share capital, net of issuance costs   205,394           
Sale and lease back transactions        8,400    9,052 
Repayment of borrowings and lease liabilities   (190,403)   (63,557)   (336,225)
Change in short-term loans   (975)   3,571    6,071 
Dividend paid to non-controlling interests   (2,808)        (3,344)
Interest and other financial expenses paid   (34,851)   (30,467)   (135,952)
Net cash used in financing activities   (23,643)   (82,053)   (460,398)
Net change in cash and cash equivalents   619,203    16,069    385,237 
Cash and cash equivalents at beginning of the period   570,414    182,786    182,786 
Effect of exchange rate fluctuation on cash held   (1,209)   (2,114)   2,391 
Cash and cash equivalents at the end of the period   1,188,408    196,741    570,414 

 

 

 

 

 

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBIT

(U.S. dollars in millions)

 

   Three months ended
March 31,		 
   2021   2020 
Net income (loss)   590    (12)
Financial expenses (income), net   39    34 
Income taxes   54    3 
Operating income (EBIT)   683    25 
Non-cash charter hire expenses   1    2 
Expenses related to legal contingencies   4    0 
Adjusted EBIT   688    27 
Adjusted EBIT margin   39%   3%

 

RECONCILIATION OF NET INCOME (LOSS) TO ADJUSTED EBITDA

(U.S. dollars in millions)

 

   Three months ended
March 31,		 
   2021   2020 
Net income (loss)   590    (12)
Financial expenses (income), net   39    34 
Income taxes   54    3 
Depreciation and amortization   134    72 
EBITDA   817    97 
Expenses related to legal contingencies   4    0 
Adjusted EBITDA   821    97 
Adjusted EBITDA margin   47%   12%

 

 

 

 

 

RECONCILIATION OF NET CASH GENERATED FROM OPERATING ACTIVITES TO FREE CASH FLOW

(U.S. dollars in millions)

 

   Three months ended
March 31,		 
   2021   2020 
Net cash generated from operating activities   777    102 
Net cash used in investing activities   (134)   (4)
Free cash flow   643    98